Suppose a firm is currently employing 20 workers, the only variable input, at a wage rate of $60

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Suppose a firm is currently employing 20 workers, the only variable input, at a wage rate of $60. The average product of labor is 30, the last worker added 12 units to total output, and total fixed cost is $3,600 and the firm's marginal cos at the current level of output is $5.

 

1. How much output is the firm currently producing?

 

2. At the current level of output, what is the firm's total variable cost?

 

3. At the current level of output, what is the firm's average variable cost?

 

4. At the current level of output, what is the firm's total cost?

 

5. At the current level of output, what is the firm's average total cost?

 

6. Choose the response from parenthesis to complete the sentence about the firm's average variable cost

 

The firm's average variable cost (is equal to | is greater than | is less than) the firm's marginal cost and so we can say the firm's average variable cost (is at a maximum | is at a minimum | is decreasing | is increasing)

 

7. Choose the response from parenthesis to complete the sentence about the firm's average total cost

 

The firm's average total cost (is equal to | is greater than | is less than) the firm's marginal cost and so we can say the firm's average total cost (is at a maximum | is at a minimum | is decreasing | is increasing)

 

8. Consider that the market price is $7. Is the firm producing at its profit-maximizing level of output? Enter a numerical value and choose the response from parenthesis to complete the sentence.

 

Given the market price of $7, at the firm's current level of output, the value of the firm's marginal product of labor Numerical Value and this (is equal to | is greater than | is less than) that the current wage rate. The firm (is | is not) producing at its profit-maximizing level of output.